If you`re starting a new company with one or more co-founders, it`s essential to have a vesting agreement in place. This agreement outlines how ownership of the company`s stock will be distributed among the co-founders, and how that ownership will be earned over time.
A vesting agreement typically includes several key provisions, such as:
– A vesting schedule: This outlines how long it will take for each co-founder to fully own their share of the company`s stock. A typical vesting schedule might require a co-founder to work for the company for four years before they are fully vested in their ownership stake.
– Acceleration provisions: These provisions outline what happens if a co-founder leaves the company before they are fully vested in their ownership stake. For example, the vesting schedule might accelerate so that the co-founder becomes fully vested in their ownership stake if they are terminated without cause or if the company is acquired.
– Forfeiture provisions: These provisions outline what happens if a co-founder leaves the company before they are fully vested in their ownership stake, but not under circumstances that trigger acceleration. Typically, the co-founder will forfeit their unvested ownership stake back to the company.
To create a vesting agreement, it`s important to work with a lawyer who has experience in this area. However, you can also use a template as a starting point for your agreement. Here are some key provisions that a co-founder vesting agreement template might include:
– Vesting schedule: This section will outline how long it will take for each co-founder to fully vest in their ownership stake. The schedule should be clear and easy to understand, and should account for any special circumstances (such as a co-founder who is only working part-time).
– Acceleration provisions: This section will outline what happens if a co-founder leaves the company under certain circumstances, such as termination without cause or acquisition. The provisions should be fair and reasonable, and should encourage co-founders to stay with the company for as long as possible.
– Forfeiture provisions: This section will outline what happens if a co-founder leaves the company before they are fully vested in their ownership stake, but not under circumstances that trigger acceleration. The provisions should be clear and should make it easy for the company to reclaim any unvested ownership stake.
– Transfer restrictions: This section will outline any restrictions on transferring ownership in the company. For example, it might prevent co-founders from selling their ownership stake to outsiders without first offering it to the other co-founders.
Creating a vesting agreement can seem daunting, but it`s an important step in ensuring that your company gets off to the right start. By working with a lawyer or using a template as a starting point, you can create an agreement that is fair and reasonable for all co-founders.